June/July 2012

Ballad of a “semi-working” man

Equal measures of patience and experience keep Terry MacGibbon in business

By
Janice Leuschen

After a long career with Inco, Terry MacGibbon redefined retirement and played a key role in several very successful mining opportunities by capitalizing on his out-of-the-box approach to undeveloped resource potential. With FNX, he and his team turned non-core assets acquired from Inco into very profitable producing mines, and following the sale of Quadra FNX to KGHM this year, he is pursuing more opportunities to build new mining companies. As chairman of the board of three enterprising juniors, MacGibbon has found himself with the freedom to work when and how he wants – a combination he hopes is lucrative for all stakeholders.

CIM: In the sale of Quadra FNX, did KGHM approach you or did you approach them? MacGibbon: KGHM was one of the companies which bid on the partnership that Quadra FNX was developing for Sierra Gorda. KGHM was not the successful bidder but its management became familiar with Quadra FNX through that process, and I guess they liked what they saw and decided if they could not be Quadra FNX’s partner in Sierra Gorda, they’d acquire the entire company and all of its assets.

CIM: How did it feel to sell the company you envisioned and grew?

MacGibbon: The real change wasn’t when we sold Quadra FNX but when we merged FNX with Quadra and formed Quadra FNX – that was a big transformation for me. I went from being a 24/7 president and CEO to being the chairman and not being involved on a day-to-day basis. It’s like having children – you bring them into the world, nurture them, watch them grow, mature and reach their potential – and then they leave. Most of the FNX employees, including many friends, chose to stay with Quadra FNX and were treated very fairly – and the vast majority of our Quadra FNX team continues to work for KGHM in rewarding employment – that meant a lot to me and made both transactions much easier.

CIM: FNX’s arrangement with Inco was not typical. How did it work?

MacGibbon: Back around 2001, Inco decided it had some non-core former-producing mineral properties that it wasn’t going to do anything with. The company put them up for purchase and ran an auction, and I was fortunate to be invited to bid. When I looked at the data during the due diligence process, I saw outstanding exploration potential (we eventually made eight discoveries and found five mines), but I also saw there were near-term production opportunities. I correctly believed that some of these former producing mines could be put back into production by an entrepreneurial, low-cost mining company, like FNX, and make money.

In most mines, you have to bring the ore to surface, crush it and mill it, then sell the concentrate to a smelter. In our case, we brought the ore to surface and then shipped it directly to Inco’s mill. They milled and processed the ore. Since Inco had a huge mill that was not operating to full capacity, we didn’t have to build a mill and could concentrate our investments in mining and exploration and not in processing facilities.
It was a symbiotic relationship. We could mine cheaply and they wanted the metal. They made money on the processing and marketing of the metal and we made money on mining the product and selling it to Inco. Of course, we all greatly profited from a very strong bull commodity market.